What are Incoterms?
Incoterms (international commercial terms) are a set of standardized references that have been defined by the International Chamber of Commerce (ICC) to help reduce confusion and create an understanding for trade contractual obligations across borders.
Utilizing Incoterminology can help companies ensure they have a complete understanding of any obligations for either party and ensures clear definitions across the industry.
When are Incoterms used?
Inco terms can be applied to trade being done by any means of transportation, while there are a certain set of incoterms that relate strictly to trade done by sea.
The general Incoterms for all trade include Ex Works (EXW), Delivery Duty Paid (DDP) and Delivered at terminal (DAT) and help establish a baseline understanding for shorthand general conversations about a business arrangement.
Sea or inland waterway Incoterms have been defined in order to conform with specific regulations around those logistics.
For more information about incoterms, there are a number of industry acronyms that relate to certain contractual obligations.
The Incoterms 2020 update will also have updated terms for the modern era, building upon the last release from Incoterms 2010.